KARACHI: The rupee found no place to stay against the greenback in the open market on Wednesday as the dollar attracted a record high price of Rs119.50.

The development comes only days after the State Bank of Pakistan (SBP) held an emergency meeting with exchange companies after a similar downward move, urging their heads to do more to arrange supply of dollars in the open market.

Two representative organisations of the currency dealers held separate meetings with their members and decided to bring down the dollar rates and announced to penalise detractors if the guidelines are not followed.

“We, the members of Forex Association of Pakistan (FAP) decided to bring dollar to Rs118.70 for selling on Thursday morning,” said President FAP Malik Bostan. This is slightly lower than the closing rate of Rs119 on Wednesday, indicating that Rs119 has been accepted by the market forces.

Exchange Companies Association of Pakistan (ECAP) also decided the same rate for Thursday morning; Rs118.70 selling and Rs118.40 for buying. “In case of violation the ECAP will fine violators in the first instance, if repeated, the case will be referred to SBP by the ECAP,” said a press release.

Both the organisations have no legal authority to penalise its members for selling dollar at different rates as the open market has no fixed rate. However, exchange companies said in case of violations, the membership of a company can be cancelled.

The dollar rates would be decided twice every day — morning and evening — as per the demand and supply. Mr Bostan said SBP will decide about the supply of dollars.

In the past, the central bank had been supplying greenback in the open market to strengthen the exchange rate or bring down the dollar rates. However, this time the SBP is using the exchange companies to bring down these rates while no applying no pressure to strengthen the local currency.

The wide gap in dollar rates of the two markets - interbank and open - has opened doors for Hundi and Hawala transactions that could hurt the remittances through legal channels.

Published in Dawn, April 26th, 2018